Matt wants to invest 100,000 in preferred stock that will pay qualified dividend income of 7%....

Matt wants to invest 100,000 in preferred stock that will pay qualified dividend income of 7%.

Matt has the following personal and business debt:

- Personal credit card with annual interest rate of 12%: $10,000

- Business credit card with annual interest rate of 9.5%: $50,000

- Home mortgage with annual interest rate of 6%: $450,000

- Student loans with annual interest rate of 7.5%: %40,000

- Car loan with annual interest rate of 8%: 20,000

Matt's marginal tax rate is 32% with dividends being taxed at 15%. How should Matt allocate the $100,000 to obtain the highest after-tax return?

Expert Solution

jeff jeffy answered 2 years ago

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